The Hungarian Competition Authority (GVH) has imposed a total fine of HUF 365.5 million (around €931,000) on the Bahamian-based security technology company Paradox Security Systems and its Hungarian distributor, following repeated proceedings ordered by the administrative court.
The GVH found that the companies had restricted competition among security technology equipment sellers on the Hungarian market for nearly ten years, while also limiting trade between European Union Member States.
The original investigation, concluded at the end of 2019, revealed that Paradox Security Systems Bahamas Ltd. (Paradox Bahamas) and its Hungarian distributors, Power Biztonzástechnikai Kereskedelmi Kft. (Power) and Trióda Biztonzástechnika Zrt. (Trióda), had engaged in several anti-competitive practices. These included prohibiting the sale of Paradox products abroad through a passive export ban, setting minimum installer margins that indirectly fixed resale prices, and restricting online sales by prohibiting the publication of end-user prices.
In the original proceedings, Trióda admitted the infringement, made a settlement statement, and did not seek legal remedy. However, Paradox Bahamas and Power challenged the GVH decision in court. The administrative court annulled the original ruling, citing concerns regarding the definition of the market and the justification of cross-border trade effects, and ordered a repetition of the proceedings.
In the repeated proceedings, the GVH reaffirmed the original findings based on distribution contracts, market conduct, and evidence collected during inspections. The Authority concluded that the companies’ practices allowed resellers and installers to achieve higher margins, which were ultimately passed on to consumers. These higher margins also incentivized resellers and installers to recommend Paradox products over competitors, further limiting consumer choice and competition in the Hungarian market.
As a result of these violations, the Competition Council imposed fines of HUF 268 million (€683,400) on Paradox Bahamas and HUF 97.5 million (€248,625) on Power. The lower fine for Power reflected its status as a small or medium-sized enterprise, its cooperation during the proceedings, admission of the infringement, and commitment to implement a mandatory compliance program.
